- When the trade balance is high, the CAD appreciates. The appreciation brings the trade balance down, and the CAD hits a plateau.
- While the CAD is plateaued, the trade balance increases.
- Go to 1.
Right now, we're at step 2: the CAD has been trading in a narrow range around parity with the USD since November, and during this time, the price of oil and other commodities that Canada exports have risen sharply - and so has the trade balance.